China requires over $5 trillion of investments to reach its pathway for carbon-neutrality by 2060, according to a new study released by Wood Mackenzie.
China needs to expand its solar, wind and storage capacities by 11 times to 5,040 GW by 2050 compared to 2020 levels, to be able to meet its 2060 goal.
Coal-fired power capacity will need to be halved while gas ends at the same level as in 2019. Total power output will need to expand by nearly 2.5 times to 18,835TWh by 2050 compared to current levels.
One challenging restricting China to reach its carbon-neutral goal is the lack of scalable low-carbon alternatives in the transport and industrial sectors. Last year, China’s carbon emissions from these two sectors reached 5.7 billion tonnes, roughly as large as the total emissions in the US and the UK combined.
As a result, these sectors will require government subsidies and/or carbon pricing to decarbonise.
Under efforts to ensure the decarbonization of the two sectors, China is expected to become a center of energy innovation to decarbonize difficult sectors.
Wood Mackenzie states that China’s road transport must be fully electrified. Total new stock of electric vehicles will need to hit 325 million units by 2050, compared to 4 million units today.
This will help reduce demand for oil, with demand expected to collapse below 7 million barrels per day by 2050.
The industry sub-sectors such as steel, cement, refining and chemicals, would require hydrogen and CCS as mainstream fuel and feedstock supply options to tackle emissions.
Hence hydrogen production could grow five-fold to approximately 150 million tonnes by 2050, equally distributed between green hydrogen (electricity-based) and blue hydrogen (coal- or gas-based, paired with CCS).
Wood Mackenzie Asia Pacific’s head of markets and transitions, Prakash Sharma, said: “It is definitely a colossal task for a country using 90% hydrocarbons in its energy mix and annually producing more than 10 billion tonnes of CO2-e, and in addition, accounting for 28% of global total emissions.
“In our Accelerated Energy Transition (AET-2) scenario, China’s emissions peak immediately and enter a period of rapid decline, reaching net-zero slightly after 2050.
“This is achieved by wide-scale electrification of transport, heating and industry as well as the deployment of carbon capture use and storage (CCUS).
“The most challenging part of the shift is not the investment or magnitude of renewable capacity additions but the social transition that comes with it. Halving coal capacity will result in loss of coal mining jobs, affecting provinces that depend on its revenues and employment generation.